The Impact of Intellectual Capital and Corporate Governance on Financial Performance in Indonesia’s Financing Services Sector

Abstract

Aims: The aim of this research is to determine the influence of VAIC and GCG on ROA in financing services sub-sector firms listed on IDX in 2019 – 2023. Intellectual Capital quantified by value added capital employed (VACA), value added human capital (VAHU), and value added structural capital (STVA). GCG in this case is proxied with the audit committee, board of directors and independent commissioners. Study Design: Intellectual Capital and Good Corporate Governance are independent variables, while the dependent variable is financial performance. Place and Duration of Study: Unbalanced panel data was used for this study from finance services sub-sector companies that met the sample criteria from 2019 to 2023. Methodology: The sampling technique used was purposive sampling, so that 33 companies with 105 data were obtained. The analysis technique used is the classical assumption test and multiple regression analysis in SPSS 22. Results: The findings of this study indicate that intellectual capital gauged by VACA and STVA positively affect ROA, while VAHU negatively affect ROA, VAHU has a negative impact on ROA if investment in human capital is not balanced with the resulting productivity. Management inefficiencies, competency mismatches, and high costs without direct results can reduce the contribution of human capital to profitability, thereby lowering ROA. The second finding revealed that Good Corporate Governance as gauged by the audit committee, board of directors and independent commissioners does not influence ROA. Optimization of human resources with the right skills and experience will improve operational efficiency, reduce wasteful spending, and ultimately contribute to better financial management.